S.J.C. Order of Reinstatement entered by Justice Lynch on February 17, 20001

HEARING PANEL REPORT

I. INTRODUCTION

The petitioner, Sanford Wechsler ("WECHSLER"), seeks reinstatement following an order dated December 3, 1997, accepting his resignation in lieu of further disciplinary proceedings, for a period of one year. See Matter of Sanford Wechsler, 13 Mass Atty's. Disc. R. 842 (1997).

Following Wechsler's filing of his petition for reinstatement, a hearing was held on August 3, 1999, before Anthony W. Fugate as Chairperson and Naomi Gordon and Mitchell H. Kaplan as panel members. For the reasons that follow, the panel recommends that the petition be allowed, subject to the conditions of probation set forth herein.

II. BACKGROUND FACTS

Wechsler graduated from Boston College Law School after a career in mental health social work. Transcript of Hearing dated August 3, 1999 ("TR") 7, 23-27. He was admitted to the Bar of the Commonwealth in December of 1983.

After becoming a member of the Bar, Wechsler began practicing law in collaboration with Bicknell & Smith, a firm located in Cambridge, Massachusetts. His work load consisted primarily of representing buyers, sellers and lenders in purchase and sale agreements and closings. Between 1985 and 1993, he was involved in approximately 400 real estate closings. Tr. 11.

A. OVERVIEW OF ETHICAL VIOLATIONS

In May of 1990, a judge of the Superior Court entered an order granting a Plaintiff specific performance of a real estate purchase and sale agreement. At the time, the client was represented by counsel other than the Petitioner. The order required the Plaintiff to obtain financing for her purchase within 45 days.

Upon receipt of the Court's order, the Plaintiff’s trial counsel contacted Wechsler, to request that he assist the client in obtaining the needed financing. In late May, Wechsler met with the client. During their meeting, the client told Wechsler that in addition to obtaining financing sufficient to acquire the property, she also wished to borrow additional money to make improvements on the property and to pay a portion of her previous counsel's legal fee. The Petitioner agreed to represent the client. The Petitioner and the client agreed that the fee would be $20,000.00, contingent upon his ability to secure financing within the allotted period of time. The fee agreement was not in writing as required by Rule 3:05 of the Rules of the Supreme Judicial Court.

On June 1, 1990, Wechsler contacted a loan officer at a bank where he and his law firm were on the list of approved attorneys. He discussed with the loan officer obtaining financing for the client within the allotted time. He did not tell the loan officer that he would receive a fee from the loan proceeds, if he was able to obtain financing for the client.

On June 1, 1990, at Wechsler's suggestion, the client applied to the bank for first mortgage financing in the amount of $425,000.00. After the loan application was submitted to the bank, but prior to the loan being approved, the client's previous counsel informed Wechsler, that the client had agreed to give him a second mortgage of no more than $300,000.00 to secure the balance of the trial counsel's legal fee. At his request, Wechsler agreed to draft the second mortgage.

On June 20, 1990, the bank issued a commitment letter to the client. A paragraph in the commitment letter specified that the client could not further encumber the property without the prior written approval of the bank. Wechsler received the commitment letter on or about June 21, 1990. In a separate letter to him, the bank designated Wechsler's law firm, as the settlement agent for the loan. Wechsler did not advise either the client or the client's previous counsel that the client was required to obtain the bank's prior written approval of any subsequent mortgages.

The closing on the property took place on June 22, 1990. Before the closing Wechsler gave the client the commitment letter and told her to sign it, without telling her that she was prohibited from placing any further encumbrances on the property without the bank's prior written approval. When the client signed the letter, the Attorney knew that she was going to give a second mortgage to her previous counsel.

Upon the conclusion of the closing, Wechsler had the client sign the mortgage to her trial counsel, and he notarized her signature. He did not advise the client about the prohibition against granting a second mortgage. Wechsler recorded the bank's mortgage on June 22, 1990 and recorded the mortgage to the client's trial counsel on July 5, 1990.

On June 22, 1990, the bank deposited $425,000.00 in Wechsler's law firm's conveyancing account. He then directed the accountant at the law firm to issue a check to the client for $25,220.99, which represented the proceeds to the client after payment of the purchase price, closing costs, and payment of a portion of her trial counsel's legal fee. Pursuant to his instructions, the client deposited, the net proceeds-check into her personal account and issued a check to the Petitioner from the account for $20,000.00.

By June 1993, the client had fallen into arrears on the bank's loan. In doing a title run-down, a loan officer at the bank discovered the second mortgage on the property. In a subsequent meeting with the loan officer and the senior partner at Petitioner's law firm, he admitted that he had failed to disclose the second mortgage to the bank. In addition, he told the loan officer that he had received a $20,000.00 fee for securing financing for the client. The bank's loan officer reported Wechsler's conduct to the United States Attorney's Office.

On December 28, 1995, Wechsler and the United States Attorney entered into a settlement agreement whereby he agreed to pay a civil penalty of $40,000.00 and to perform Two Hundred (200) hours of non-legal community service.

Wechsler's failure to disclose to the bank that he was to receive a fee from his client contingent upon approval and closing on the loan; his failure to advise the client of the bank's requirement to obtain prior written approval of further encumbrances; his concealment of and failure to disclose to the bank the second mortgage; his drafting, securing the execution of, and recording the second mortgage; his failure to have a written contingent fee agreement with the client; his collection of an illegal fee; and his concurrent representation of the client, the client's trial counsel, and the bank, without obtaining informed consent when it was obvious that he could not represent the interests of each adequately were violations of Canon One, Disciplinary Rules 1-102(A)(4) and (6); Canon Two, Disciplinary Rules 2-106(A) and (C); Canon Five, Disciplinary Rules 5-105(A), (B), and (C); Canon Seven, Disciplinary Rules 7-101 (1), (2), and (3); Canon Seven, Disciplinary Rules 7-102 (A) (3). (5), and (7) and Rule 3:05 of the Rules of the Supreme Judicial Court.

After the civil disposition, the Office of Bar Counsel investigated the matter. Tr. 18. Wechsler cooperated with this investigation and entered into a stipulation and joint recommendation for the suspension. B.C. Exh. No. 1; Tr. 18. On December 3, 1997, Wechsler was suspended from the practice of law for a term of one year. B.C. Exh. No. 1; Tr. 18.

C. CONDUCT SINCE SUSPENSION

After the suspension, Wechsler spent a significant amount of time managing a condominium development project. Tr. 18-19.. Since the project's completion, he has earned a living primarily by doing carpentry in the Cambridge area. Tr. 20.

Wechsler estimates that his taxable income in 1998 was approximately $60,000.00- $70,000.00. Tr. 22. prior to his suspension, his income varied between $80,000.00 and $125,000.00. Tr. 22.

D. LEARNING IN THE LAW

Since his suspension, Wechsler has kept himself up to date in connection with changes in real estate law and reads Lawyer's Weekly. Tr. 42, 50-51, 55. When Bar Counsel asked
Wechsler about a recent Supreme Judicial Court decision affecting real estate law, Wechsler was able to discuss the holding of the case in some detail. Tr. 52-53.

E. STANDING OF THE BAR AND PUBLIC INTEREST

Wechsler admitted he had been aware that his failure to disclose the $20,000.00 fee to the lender was a breach of his fiduciary duty. Tr. 14-15. He also admitted that he was aware that preparing the second mortgage instrument without the permission of the lender was prohibited under the terms of his client's mortgage commitment letter. Tr. 15-16.

Wechsler admitted that he did not disclose his fee to the lender because he wanted to close the deal and receive the fee. Tr. 13-14. He also admitted that preparing the second mortgage was a "terrible error in judgement on [his] part" and that he failed to disclose the mortgage to the lender "out of [his] own self-interest." Tr. 16.

Wechsler has paid $30,000.00 of his $40,000.00 civil penalty and is working to pay off the remaining amount. Tr. 60-62. He is current on all other indebtedness that was identified in his reinstatement questionnaire. Tr. 66-67. Wechsler also fulfilled the community service component of his civil settlement, completing in excess of 200 hours with the Children's Law Center in Lynn, Massachusetts. Tr. 65-67.

Wechsler believes that he will be able to maintain a viable practice if he is reinstated because he continues to receive calls from persons who would like him to represent them. Tr. 28. In support of the Petition, Wechsler has submitted letters from attorneys and former clients, including Frederick B. Hayes, III Esq.; Larry Katz; David Rosebaum; Carlos E. Estrada, Esq.; Stephen S. Clark, Esq., Bruce J. Embry, Esq.; and Kathleen C. McCabe, Esq. Petitioner's Exhibit ("Pet. Exh.") Nos. IA-1F. These letters address Wechsler's knowledge of the law, ethical sensitivity, and remorse over the conduct that resulted in his suspension from the Bar.

For instance, Attorney Hayes writes, "[R]einstatement would restore to the bar a lawyer who is well versed in the law and sensitive to the needs of his clients, and who is also extraordinarily aware of the ethical lines which those in our profession must not cross." Pet. Exh. No. 1A.

Similarly, Attorney's Clark and Embry write, "Prior to [Wechsler's] suspension, we personally and our firm collectively had very frequent interaction with Mr. Wechsler in numerous real estate transactions. We also considered Mr. Wechsler to be a valued colleague and knew him to be well regarded by his peers, associates and clients." Pet. Exh. No. 1E.

Wechsler's former business partner, Attorney McCabe, writes "In all my interactions with [Wechsler] on legal matters I found him to be very well informed of the law and legal ethics. He was honest and trustworthy and interacted with his client and other attorneys with integrity and care...I have stayed in close contact with [Wechsler] during his suspension and have witnessed his increased understanding of the seriousness of his actions. I honestly believe that he would not make such an error again." Pet. Exh. No. 1F.

Conclusion of Law

It is Wechsler's burden to demonstrate that he has "the moral qualifications, competency and learning in the law required for admission to practice law in the Commonwealth, and that his... resumption of the practice of law shall not be detrimental to the integrity and standing of the bar, the administration of justice, or to the public interest." Supreme Judicial Court Rule 4:01, § 18(5).

The Hearing Panel is satisfied that Wechsler has met this burden. Wechsler admits that, at the time of his misconduct in 1990, he was aware that he was violating his duties as an attorney. He has expressed regret for his actions and has assured the Hearing Panel that he will take all the necessary steps to avoid such conduct in the future. His reinstatement is supported by a number of Wechsler's former colleagues and clients who express confidence that his 1990 conduct was a serious but exceptional mistake which he will not repeat.

Wechsler's learning in the law was never called into question as a result of the incident that led to his suspension. However, Wechshler has demonstrated to the Hearing Panel that he is a competent attorney and is aware of recent developments in real estate law. The letters of support from members of the Bar further support the conclusion that Wechsler has the legal skills to resume the practice of law.

CONDITIONS OF PROBATION

Part one - M. P. R. E.

Within thirty days of the entry of the order of reinstatement, the Petitioner shall register for the next available Multistate Professional Responsibility Examination (M. P. R. E.). The Petitioner shall achieve a score of 75 or above on such examination and shall furnish evidence of this to Bar Counsel.

Part Two - Peer Monitoring

Within thirty days of the entry of the order of reinstatement, the Petitioner shall submit to Bar Counsel the name of an attorney engaged in the active practice of law in Massachusetts who has agreed to act as a peer monitor for the Petitioner ("the Peer Monitor"). Bar Counsel shall approve or reject the proposed Peer Monitor within seven days of submission. Upon approval of the Peer Monitor by Bar Counsel, the Peer Monitor shall:

(1) meet with the Petitioner at least once a month during the Petitioner's probation to review the Petitioner's client caseload and to discuss any actual or potential ethical issues that may arise from the Petitioner's representation of his clients;

(2) conduct at least three unannounced random reviews of the Petitioner's client files every six months during the Petitioner's probation; and

(3) be reasonably available during the Petitioner's probation to answer questions by the Petitioner about case management and ethical issues.

No later than the tenth day of each month, the Peer Monitor shall certify to Bar Counsel whether the Petitioner met with the Peer Monitor at least once during the previous month and whether, to the Peer Monitor's satisfaction, the Petitioner appeared to be conducting himself within the bounds of the Massachusetts Code of Professional Conduct. The Peer Monitor's certification shall also include the results of any unannounced random client file review conducted during the previous month.

The Petitioner and the Peer Monitor shall take all necessary steps to preserve client confidences and to avoid any actual or perceived conflicts of interest.

Part Three - Continuing Legal Education

The Petitioner shall complete no fewer than fifteen hours of continuing legal education during his probation. Every six months during his probation, the Petitioner shall submit to Bar Counsel appropriate certifications demonstrating that he completed no fewer than five hours of such courses during the previous six months, but remembering that the yearly total shall be fifteen.

Part Four- Malpractice Insurance

The Petitioner shall maintain malpractice insurance with liability limits of at least $300,000/$500,000, with a deductible not exceeding $10,000, for the duration of his probation.

Part Five - Civil Penalty

The Petitioner continues to have an outstanding balance of approximately Ten Thousand ($10,000.00) dollars, associated with the civil penalty imposed. The Petitioner is required to provide a detailed payment plan agreeable to the U.S. Attorney's Office and Bar Counsel, within Thirty (30) days following this order. Said payment plan must specify that the balance is to paid in full within one year.

Part Six - Termination of Probation

The Petitioner's probation shall terminate twenty-four months from the date of the entry of the order of reinstatement.